Now, Kingfisher aims for limited relaunch in Feb with 7 aircraft

The carrier needs between Rs.3,000 crore and Rs.5,000 crore to fly again in any meaningful way, according to analysts. Photo: Ramesh Pathania/Mint

Updated: Wed, Jan 16 2013. 11 03 PM IST

Mumbai:Kingfisher Airlines Ltd is working on a plan to restart operations by the end of February in support of which the airline has made seven small ATR planes ready for inspection by the aviation regulator and retrained a few pilots, two of the grounded airline’s executives said, speaking on condition of anonymity.

The executives said the plan is subject to approvals by the Directorate General of Civil Aviation (DGCA) and various airport operators, including the state-run Airports Authority of India (AAI).

Kingfisher’s operating licence was suspended in October by DGCA following a strike by the airline’s employees. The licence has since expired, although it can be renewed within two years.

The airline has held creditors and employees who have not been paid salaries for several months at bay by holding out the promise of a revival, infusion of funds by promoters, and the entry of a foreign investor. Unfortunately, none of these have played out as promised.

Sanjay Aggarwal, chief executive officer of Kingfisher Airlines, met director general of civil aviation Arun Mishra on Wednesday and told him that the airline has secured no-objection certificates from oil marketing companies and some of the leasing companies to restart operations, the company said.

An aviation ministry official said the airline is yet to get the approval of airport operators.

The plan will be funded by promoters, said one of the two executives. He added that it involved restarting with seven ATR aircraft and that the number could increase to 21 by May.

In a presentation to lenders last year, promoter Vijay Mallya had said Kingfisher will resume operations with seven aircraft and increase it to 21 in four months. At its peak, Kingfisher Airlines was flying 66 planes to 68 locations, including eight international, with 374 flights a day, and accounted for 20% of the market. And in a 10 January letter to employees, Mallya reassured them that the airline will begin flying by summer with a Rs.650 crore infusion from parent UB Group.

“The limited restart plan, which we target for the beginning of the 2013 summer schedule, requires a funding of approximately Rs.650 crore, which is committed to be provided by the UB Group and associates,” Mallya said in the letter.

The aviation ministry official cited above said the airline was yet to furnish assurances from the promoter on the required funds and that the plan has no fiscal depth as Rs.650 crore wouldn’t last very long.

A Mumbai-based pilot at the airline shrugged off the plan and said it should have started bookings if it wants to fly in February. “There is no such plan,” he said, asking not to be identified.

Some employees have planned a hunger strike from 21 January demanding salaries that have not been paid since June.

Another group is planning legal action seeking closure of the airline, while a third is demanding a meeting with chairman and promoter Mallya ahead of his meeting with lenders on 18 January. The airline owes banks around Rs.7,000 crore.

Analysts have previously said the grounded airline needs between Rs.3,000 crore and Rs.5,000 crore to fly again—in any meaningful way.

The second Kingfisher Airlines executive said the critical part for the restart plan “is a no-objection certificate from airport operators”.

A senior AAI executive who asked not to be identified said the airline needs to clear its dues before flying. The airline owes around Rs.220 crore to the state-owned airport operator.

Consulting firm Centre for Asia Pacific Aviation, or Capa, expects Kingfisher Airlines’ resumption with five to seven aircraft to be a more realistic prospect, although challenges remain, said Kapil Kaul, chief executive officer (South Asia). The airline should demonstrate the availability of funds, and the no-objection certificates from airport operators are essential, he said.

“Kingfisher Airlines is likely to scale to about 20 to 22 aircraft in a few months, post the resumption,” Kaul said. “The restart is aimed at winning back customer, employee, market regulator’s confidence by delivering reliable, safe and orderly operations while simultaneously finalizing strategic and financial investors to fully recapitalize the airline. An orderly and stable resumption is more likely to attract investors.”